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Commission is the amount or percentage of money a salesperson makes each time he sells a company's or vendor's item. While sales commission is typically a predetermined value, specific business factors can cause a change. No matter which side of the commission you're on -- giving or receiving, sales commission etiquette is an essential part of handling that form of payment professionally.

Primary Negotiations

Whether you pay your sales force on a commission basis or receive a commission from one of your vendors, initial negotiations are an important part of developing your business relationship. Working together will help you establish your common goals as well as establish an understanding of each other's business goals. Armed with this knowledge, you can set up an initial sales commission that motivates the sales force and is beneficial to the company.

Open Lines of Communication

Business needs change, and what was once considered a fair or competitive sales commission can alter. Keep the lines of communication open, and be willing to discuss the factors that affect a sales commission. As a business earning commission on items you sell for one of your vendors, being offered a better commission from a competing vendor can lead to a new set of negotiations with the first vendor. Likewise, your top salesperson may ask for a higher commission percentage. Be willing to look at her numbers to see if her performance warrants added commission or other perks.

What Is Best for the Business

When using sales commission etiquette to negotiate with vendors or sales employees, it's important to do so from a standpoint of what is best for the business. Although maintaining a happy sales staff can result in greater productivity, it can't be done at the neglect of other areas or departments. Often no cap exists on how much a person or company can earn on commission. Use that factor as motivation to earn more money rather than considering every request to raise a commission rate or sales incentives.

Bottom Line

Maintaining your business's bottom line is vital to remaining in business. Too much commission paid to sales employees or not enough commission earned from vendors for whom you sell directly affects your ability to keep all areas of your business running. When determining sales commissions percentages, base them on the business' bottom line, gross margin profit and what is needed to keep the business out of the red. While fairness is an essential part of sales commission etiquette, fairness at the expense of what is best for the company does nobody any good.

About the Author

Mary Ylisela is a former teacher with a Bachelor of Arts in elementary education and mathematics. She has been a writer since 1996, specializing in business, fitness and education. Prior to teaching, Ylisela worked as a certified fitness instructor and a small-business owner.